8-K
GENCOR INDUSTRIES INC (GENC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENTREPORT
Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934
Date of Report: August 6, 2020
(Date of earliest event reported)
GENCORINDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
5201 North Orange Blossom Trail, Orlando, Florida 32810
(Address of principal executive offices) (Zip Code)
(407) 290-6000
(Registrant’s telephone number, including area code)
| Delaware | 001-11703 | 59-0933147 |
|---|---|---|
| (State or other jurisdiction of<br><br><br>incorporated or organization) | Commission<br><br><br>File Number | (I.R.S. Employer<br><br><br>Identification No.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17<br>CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered or to be registered pursuant to Section 12(b) of the Act
| Title of Each Class | Trading Symbol(s) | Name of Exchange on which registered |
|---|---|---|
| Common Stock ($.10 Par Value) | GENC | NASDAQ Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On August 6, 2020 Gencor Industries, Inc. issued a press release announcing its financial results for the third quarter of fiscal 2020. A copy of the press release is attached as Exhibit 99.1.
The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 Earnings Release dated August 6, 2020
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GENCOR INDUSTRIES, INC. | ||
|---|---|---|
| August 6, 2020 | By: | /s/ John E. Elliott |
| John E. Elliott, Chief Executive Officer | ||
| August 6, 2020 | By: | /s/ Eric E. Mellen |
| Eric E. Mellen, Chief Financial Officer |
Index to Exhibits
| Exhibit<br><br><br>No. | Description |
|---|---|
| 99.1 | Earnings Release dated August 6, 2020 |
EX-99.1
Exhibit 99.1
GENCOR RELEASES THIRD QUARTER FISCAL 2020 RESULTS
August 6, 2020 (PRIME NEWSWIRE) - Gencor Industries, Inc. (Nasdaq: GENC) announced today net revenues of $22.9 million for the quarter ended June 30, 2020 compared to $18.8 million for the quarter ended June 30, 2019. Gross margins were 23.5% for the quarter ended June 30, 2020 compared to 25.2% for the quarter ended June 30, 2019, as the gross profit margins achieved in the current quarter were impacted by a higher percentage of revenues generated from plant and equipment sales compared with parts sales, which have a higher gross margin. Product engineering and development expenses decreased $32,000 to $849,000 for the quarter ended June 30, 2020, on reduced travel expenses. Selling, general and administrative (“SG&A”) expenses increased $51,000 to $2,522,000 for the quarter ended June 30, 2020. Increases in sales headcount resulted in the increased SG&A expenses. Operating income for the quarter ended June 30, 2020 increased 44.1% to $2.0 million compared with $1.4 million for the quarter ended June 30, 2019, on higher revenues and production volumes.
For the quarter ended June 30, 2020, the Company had non-operating income of $3.4 million compared to non-operating income of $1.7 million for the quarter ended June 30, 2019. Included in non-operating income for the quarter ended June 30, 2020 were net realized and unrealized gains on marketable securities of $2.9 million, due to recovery in the domestic equity markets after the initial declines from the impact of the COVID-19 pandemic in the prior quarter. The effective income tax rate for the quarters ended June 30, 2020 and 2019 was 20.0%. Net income for the quarter ended June 30, 2020 was $4.3 million, or $0.29 per diluted share, compared with net income of $2.4 million, or $0.17 per diluted share for the quarter ended June 30, 2019.
For the nine months ended June 30, 2020 the Company had reported revenue of $67.0 million and net income of $6.2 million ($0.42 per diluted share) versus net revenue of $66.8 million and net income of $10.2 million ($0.69 per diluted share) for the nine months ended June 30, 2019. Compared to the prior year, lower gross profit margins and net realized and unrealized losses on marketable securities contributed to the lower net income in the nine months ended June 30, 2020.
At June 30, 2020, the Company had $124.2 million of cash and marketable securities compared to $115.6 million at September 30, 2019. Net working capital was $154.7 million at June 30, 2020. The Company had no short-term or long-term debt outstanding at June 30, 2020.
The Company’s backlog was $11.7 million at June 30, 2020 compared to $11.9 million at June 30, 2019.
John Elliott, Gencor’s CEO, stated, “Gencor performed well in this challenging market environment associated with the COVID-19 pandemic. We continue to demonstrate the operating durability of our business as well as our ability to achieve solid profitability and cash flow. While there is still significant uncertainty around demand, the shape of the economic recovery and the continued impact of the pandemic, we are encouraged by the results we have achieved in the first six months of the calendar year.
Third quarter fiscal 2020 revenues were well above third quarter of fiscal 2019. Production and deliveries were minimally affected by COVID-19-related precautions in the current quarter.
The FAST Act is scheduled to expire in September 2020. Currently there is no replacement or extension of the FAST Act. While the economic outlook remains uncertain, by producing in line with customer demand and aggressively managing costs, I am confident Gencor will successfully navigate these challenging times.”
Gencor Industries is a diversified heavy machinery manufacturer for the production of highway construction materials, synthetic fuels and environmentalcontrol machinery and equipment used in a variety of applications.
GENCOR INDUSTRIES, INC.
Condensed Consolidated Statements of Income
(Unaudited)
| For the Quarters Ended<br>June 30, | For the Nine Months Ended<br>June 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||||
| Net revenue | $ | 22,940,000 | $ | 18,848,000 | $ | 66,963,000 | $ | 66,845,000 | ||
| Costs and expenses: | ||||||||||
| Production costs | 17,555,000 | 14,098,000 | 49,920,000 | 47,267,000 | ||||||
| Product engineering and development | 849,000 | 881,000 | 2,304,000 | 2,427,000 | ||||||
| Selling, general and administrative | 2,522,000 | 2,471,000 | 7,465,000 | 7,135,000 | ||||||
| 20,926,000 | 17,450,000 | 59,689,000 | 56,829,000 | |||||||
| Operating income | 2,014,000 | 1,398,000 | 7,274,000 | 10,016,000 | ||||||
| Other income (expense), net: | ||||||||||
| Interest and dividend income, net of fees | 512,000 | 567,000 | 1,907,000 | 1,608,000 | ||||||
| Net realized and unrealized gains (losses) on marketable securities | 2,888,000 | 1,090,000 | (1,465,000 | ) | 1,147,000 | |||||
| Other | (10,000 | ) | — | (20,000 | ) | — | ||||
| 3,390,000 | 1,657,000 | 422,000 | 2,755,000 | |||||||
| Income before income tax expense | 5,404,000 | 3,055,000 | 7,696,000 | 12,771,000 | ||||||
| Income tax expense | 1,082,000 | 611,000 | 1,540,000 | 2,554,000 | ||||||
| Net income | $ | 4,322,000 | $ | 2,444,000 | $ | 6,156,000 | $ | 10,217,000 | ||
| Basic Income per Common Share: | ||||||||||
| Net income per share | $ | 0.30 | $ | 0.17 | $ | 0.42 | $ | 0.70 | ||
| Diluted Income per Common Share: | ||||||||||
| Net income per share | $ | 0.29 | $ | 0.17 | $ | 0.42 | $ | 0.69 |
GENCOR INDUSTRIES, INC.
Condensed Consolidated Balance Sheets
| September 30,2019 | |||
|---|---|---|---|
| ASSETS | |||
| Current Assets: | |||
| Cash and cash equivalents | 18,564,000 | $ | 10,302,000 |
| Marketable securities at fair value (cost 105,388,000<br>at June 30, 2020 and 104,176,000 at September 30, 2019) | 105,675,000 | 105,322,000 | |
| Accounts receivable, less allowance for doubtful accounts of 419,000 at June 30, 2020 and<br>459,000 at September 30, 2019 | 1,609,000 | 1,603,000 | |
| Costs and estimated earnings in excess of billings | 10,064,000 | 13,838,000 | |
| Inventories, net | 24,562,000 | 25,366,000 | |
| Prepaid expenses and other current assets | 1,649,000 | 499,000 | |
| Total Current Assets | 162,123,000 | 156,930,000 | |
| Property and equipment, net | 8,391,000 | 8,389,000 | |
| Other assets | 53,000 | 53,000 | |
| Total Assets | 170,567,000 | $ | 165,372,000 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||
| Current Liabilities: | |||
| Accounts payable | 2,089,000 | $ | 1,907,000 |
| Customer deposits | 2,651,000 | 1,918,000 | |
| Accrued expenses and other current liabilities | 2,694,000 | 2,660,000 | |
| Total Current Liabilities | 7,434,000 | 6,485,000 | |
| Deferred and other income taxes | 1,306,000 | 3,372,000 | |
| Total Liabilities | 8,740,000 | 9,857,000 | |
| Commitments and contingencies | |||
| Shareholders’ equity: | |||
| Preferred stock, par value .10 per share; 300,000 shares authorized; none issued | — | — | |
| Common stock, par value .10 per share; 15,000,000 shares authorized;12,287,337 shares issued<br>and outstanding at June 30, 2020 and12,277,337 shares issued and outstanding at September 30, 2019 | 1,229,000 | 1,228,000 | |
| Class B Stock, par value .10 per share; 6,000,000 shares authorized;2,318,857 shares<br>issued and outstanding at June 30, 2020 and2,308,857 shares issued and outstanding at September 30, 2019 | 232,000 | 231,000 | |
| Capital in excess of par value | 12,313,000 | 12,159,000 | |
| Retained earnings | 148,053,000 | 141,897,000 | |
| Total Shareholders’ Equity | 161,827,000 | 155,515,000 | |
| Total Liabilities and Shareholders’ Equity | 170,567,000 | $ | 165,372,000 |
All values are in US Dollars.
Caution Concerning Forward Looking Statements - This press release and our other communications andstatements may contain certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), including statements about the Company’s beliefs, plans, objectives, goals, expectations, estimates, projections and intentions. These statements are subject to significant risks and uncertainties and are subject to change based onvarious factors, many of which are beyond the Company’s control. Actual results may differ materially depending on a variety of important factors, including the financial condition of the Company’s customers, changes in the economic andcompetitive environments, demand for the Company’s products, the duration and scope of the coronavirus (“COVID-19”) pandemic, actions governments, and businesses take in response to the COVID-19 pandemic, including mandatory business closures; the impact of the pandemic and actions taken on regional economies; the pace of recovery when the COVID-19 pandemicsubsides. The words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “target,”“goal,” and similar expressions are intended to identify forward-looking statements.
For information concerning these factors andrelated matters, see Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the Company’s Quarterly Report on Form 10-Q for the quarterended June 30, 2020, and Part II, Item 1A, “Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and the following sections of theCompany’s Annual Report on Form 10-K for the year ended September 30, 2019: (a) Part I, Item 1A, “Risk Factors” and (b) Part II, Item 7, “Management’s Discussion and Analysisof Financial Condition and Results of Operations”. However, other factors besides those referenced could adversely affect the Company’s results, and you should not consider any such list of factors to be a complete set of all potentialrisks or uncertainties. Any forward-looking statements made by the Company herein speak as of the date of this press release. The Company does not undertake to update any forward-looking statements, except as required by law.
Unless the context otherwise indicates, all references in this press release to the “Company,” “Gencor,” “we,”“us,” or “our,” or similar words are to Gencor Industries, Inc. and its subsidiaries.
| Contact: | Eric Mellen, Chief Financial Officer |
|---|---|
| 407-290-6000 |